Louisiana has encountered a problem with
The bridge was to be fully opened in mid-April, but plans are delayed by subsidence of the newly constructed north and south approaches to the new bridge.
The state has penalized the developer, Plenary Americas, $10,000 a day in liquidated damages since the mid-April deadline. As of Thursday, Sept. 5, that fine is $1.45 million.
Since the contract with Plenary indicates it has a right to tolls for 30 years from mid-April, every day that passes without tolls it also loses this money.
Plenary is one of three P3 developers for the
The new high-level Belle Chasse bridge over the Gulf Intracoastal Waterway is supposed to replace an aging tunnel and drawbridge to carry local traffic to and from the Plaquemines Parish southeast of New Orleans.
At a Louisiana Legislature Joint Committee on Transportation, Highways and Public Works hearing in August, committee members expressed concern about the financial and operational ramifications of the Belle Chasse subsidence and Plenary missing the April deadline.
"I think [the people of Plaquemines Parish] have gotten a raw deal and we need to find a way to fix it," said state Sen. Patrick Connick, chair of the Senate Transportation and Public Works Committee. The Republican's district includes the Belle Chasse bridge.
Joe Donahue, secretary of the Louisiana Department of Transportation and Development, told the state senators and representatives that Plenary was barred from instituting the bridge toll until the state approved a "partial acceptance."
State Rep. Jacob Braud, a Republican whose district includes Plaquemines Parish and the bridge, asked what would happen if the subsidence problem was solved, the bridge opened and toll commenced, and after a few years there was new subsidence. Could Plenary continue to toll?
Donahue responded he was unsure what the Belle Chasse contract said but that if something similar were to occur with the Calcasieu Bridge project, certain mechanisms would kick in.
Sen. Gary Carter, a Democrat whose district is near the bridge, said he hoped to have a Plenary representative speak to the joint committee if the problem wasn't solved soon.
Carter asked Donahue if Plenary was in breach of contract and Donahue responded that it was not but that if it doesn't repair the bridge approaches within a reasonable amount of time, it would be.
The state Department of Transportation and Development ordered the approaches to be demolished prior to the joint hearing and as of the August hearing that was happening, Donahue said. The contractor has tested the ground under the approaches and submitted a plan to the department for repair and rebuilding. The department is considering it now but doesn't know how long it will take to review it.
In response to questions from The Bond Buyer, Plenary said the bridge will open in the fall.
"A remediation plan has been submitted to the Louisiana Department of Transportation and Development," said Angela Noote, a spokesperson for the Belle Chasse project.
"Once a remediation plan is approved, it is estimated the work to replace the approaches will take eight to 10 weeks," Noote said.
"It's important for the public to know the settlement has impacted the approaches, not the actual bridge structure," the P3 developer said in an August update
"Although this is a setback, there is not — and never has been — any impact on the safety and integrity of the main bridge structure," the update said.
"The delay is obviously a problem but it doesn't mean that a P3 was the wrong move," said Joseph Krist, publisher of Muni Credit News. "Those who dislike P3 projects will find something to seize on and supporters of P3 projects and find things to reflect positively on them. The problem seems to be identified, a fix is available, and the P3 structure has provided a way to address it."
The situation "highlights the whole purpose behind liquidated damages or other professional penalties," Krist said. "The operator has lots of incentives to fix things."
Connick told The Bond Buyer just because there is a delay in the Belle Chasse bridge's opening, that doesn't mean P3s are bad.
"We have
The new Belle Chasse Bridge is intended to replace a 56-year-old lift bridge and 68-year-old tunnel that carried about 35,000 vehicle trips a day.
About 92% of the construction on the bridge project was complete as of the August hearing. The southbound lanes of the new bridge opened in June but as of September just one of the two lanes was fully open. The tunnel has closed. The old bridge's northbound lanes are currently being used.
At the hearing Donahue said his staff told him, "The soil down there is like peanut butter," contributing to the subsidence problem. The developer has brought in an outside consultant to try to determine the subsidence's cause.
When the state approved the P3 for the new bridge in 2019, financing was said to be coming from five sources. There would be a $53 million toll revenue bond, $12 million of Garvee bond proceeds secured by future federal grants, $26 million in federal highway funds, $45 million in federal Infrastructure for Rebuilding America grants, and $12 million from the state's regional planning commission.
The state sold the bonds to cover the $12 million as part of a
It's unclear if the developer is using the toll revenue bonds or some other form of financing. The project does not appear on the U.S. Department of Transportation Build America Bureau
When Plenary spokesperson Noote was asked about these bonds she said she couldn't provide any information.
The Bond Buyer asked the state Department of Transportation and Development about the bonds but didn't receive a response.
The state's first P3 project at Belle Chasse was a stepping stone toward the much larger P3 project for a new Calcasieu River Bridge in southwest Louisiana.
In contrast to the locally oriented Belle Chasse project, the Calcasieu River Bridge carries Interstate 10, a key national artery.
The Louisiana Public Facilities Authority sold $1.32 billion of private activity
Plenary has a 40% stake in the Calcasieu project while Sacyr Infrastructure and Acciona Concesiones each hold 30% stakes.
Construction of the Calcasieu River Bridge is planned in four segments, with the first to be completed in late 2029 and the last in fall 2031. Partial acceptance and tolling are expected to commence in August 2031.
